Instructor Karina Vasylenko demonstrates the air traffic control simulator at CAE's training facility in Montreal in January, 2025.Ryan Remiorz/The Canadian Press
CAE Inc. CAE-T says the impact of the Middle East war is hitting its bottom line as it sketched out ambitious long-term financial targets under new chief executive Matthew Bromberg.
The Montreal-based company, which builds flight simulators and trains military and commercial pilots in the United Arab Emirates and dozens of other countries, said Thursday it is experiencing “month-by-month operational and financial impacts” associated with the conflict between the United States, Israel and Iran. It is undertaking mitigation actions in response, including shifting some of its activities to other locations.
“Training sessions were just cancelled because no one wanted to leave the bunkers,” Mr. Bromberg said in an interview after CAE results were released, adding the company was also unable to deliver some flight simulators. The war had a $7-million impact on operating profit over the final weeks of the fourth quarter ended March 31, he said, calling it a challenging but manageable situation going forward.
“We’re rebooking and figuring out how to work with pilots to find their training elsewhere,” Mr. Bromberg said. He said the company is currently working on the assumption the conflict will wind down by September and fuel prices and airline capacity will return to normal not long after. “But if this extends, it’s going to be a lot of new moving pieces.”
Mr. Bromberg, a former executive at U.S. aerospace and defence giant Northrop Grumman, took over last year from long-time CEO Marc Parent. He is working to boost cash flow and profit after a 15-year expansion left the multinational straining to generate high returns from some of its assets. Shareholder Browning West says Mr. Bromberg should be able to double the company’s earnings per share over the next three to four years as he reshapes it into a more consistent-performing business.
Matthew Bromberg poses for a portrait at the CAE office in Montreal last December.Andrej Ivanov/The Globe and Mail
The CEO last fall unveiled the first steps of a transformation plan that includes tightening spending and streamlining internal organizational structures. Since then, he’s articulated plans to revamp CAE’s civil training network and boost defence sales, while weighing a sale or other strategic options for several non-core assets, including its Flightscape aviation software business.
CAE operates 373 full-flight simulators globally, including 250 for commercial pilot training, and Mr. Bromberg has said there’s a wide range in how they perform. The company now says it will cut 10 per cent of its commercial full-flight simulator fleet and relocate at least a dozen more simulators, which will meaningfully reduce its square footage and number of sites.
Combined, the structural changes the CEO is pushing forward should deliver $125-million to $150-million in annual savings by fiscal 2030, CAE said in a news release Thursday. That will allow the company to boost operating income by 30 per cent or more from current levels, to as much as $1-billion by that date, Mr. Bromberg said.
The current year will be a tough one, the CEO said. “But one that’s necessary to reposition us for strong growth.”
War in the Middle East and conflict elsewhere has disrupted global aviation, testing the resiliency of airlines. Carriers have been forced to pay more for jet fuel, and and have cut flights and raised fares as a result. However, pilots need to retrain at constant intervals regardless of how often they’re actively flying.
CAE reported fourth-quarter earnings per share of 23 cents on revenue of $1.33-billion. On an adjusted basis, profit was 42 cents per share, in line with analyst estimates. Full-year adjusted earnings per share came in at $1.20 on revenue of $4.9-billion.